The Billion Prices Project @ MIT
Professors Roberto Rigobon and Alberto Cavallo are leading The Billion Prices Project, held at MIT Sloan School of Management. They are collecting online data of commodities prices on a daily basis to compute inflation statistics. Food, beverage, household products, electronics, apparel, and real state are daily monitored in countries as US, UK, Argentina, Australia, Brazil, Chile, China, Colombia, France, Italy, Turkey and Venezuela.
The daily availability of their prices index allows policy makers to make decision with “real time” data. Their indexes have been sensitive to the US recession and the following recovery even before official announcements.
In addition to providing inflation estimates, Cavallo and Rigobon also are using the data to conduct research on areas such as price-stickiness, price adjustments to shocks, the relationship between asset and retail prices, sales strategies, and premiums paid for green or organic products around the world.
The Billion Prices Project, says Rigobon, represents “a breakthrough innovation in the field of inflation statistics and is a great opportunity to conduct economics research that was impossible before. We want to improve the way inflation is measured and reported. Our data provides the right level of detail and relevance required to not only track official statistics, but also forecast future trends.”
In a long term future, it would be interesting to test regime shifts ideas on price index datasets. Researches have modeled before commodities cycles commonly known as business cycles, fluctuations in the macro-economy with a period of 3 – 7 years. I guess that the same dynamics underlying pest outbreaks in ecosystems underlies break-out changes in economy.